Co-op unveils farm, pharmacy sell-offs as losses mount
By Belinda Goldsmith
LONDON (Reuters) - Britain's embattled Co-operative Group said on Wednesday it was selling its farming business and looking at offloading its pharmacies as the BBC reported the group was about to report the worst loss in its 170-year history.
The sales are part of a restructuring at the member-owned group rocked in the past year by the discovery of a 1.5 billion pound capital hole in its banking arm and a drugs scandal involving ex-chairman, Methodist minister Paul Flowers.
The BBC reported the Co-op, a well-known high street presence with banks, supermarkets and funeral homes, is about to post a loss of over 2 billion pounds when its 2013 results come out on March 26.
Citing sources, it said the losses stemmed mainly from its banking unit together with a reduction in the value of the stores and goodwill it acquired in a 1.6 billion pound deal in 2009 to take over the Somerfield grocery chain.
A Co-op spokeswoman declined to comment on the BBC report or give any guidance on the 2013 results.
A loss for full 2013 was expected after the group reported a pre-tax loss of 559 million pounds for the first half including a loss of 709 million pounds from its bank. It reported a full year loss for 2012 of 599 million pounds.
The Co-op, owned by nearly 8 million members and operating nearly 4,500 retail outlets, admitted this month that it had lost touch with its customers and members and launched a national survey on its future strategy.
In a bid to revitalise its operations, the group has embarked on a strategic review and on Wednesday said this concluded its farming business, described as the largest in the UK, was "non-core".
The Co-op runs 15 mostly arable farms, three in Scotland and the rest in England, that cover 50,000 acres in total. The division also owns three packing sites.
"(The group) has started a process that is expected to lead to a sale of the business," the company said in a statement.
"In addition, it is exploring options for the future of the pharmacy business; this could include the sale in whole or part of the business."
A source familiar with the situation told Reuters the process of selling its 750 pharmacies that employ over 6,500 people was at an earlier stage than its farm sale.
The Co-op described itself as one of the top three pharmacy businesses in the UK.
The group had planned to sell its general insurance business but scrapped that plan in January this year, saying it didn't need to raise as much capital as originally envisaged to support its bank.
The Co-op was forced to cede control of its banking business to hedge funds involved in a refinancing plan last year after the scale of its capital shortfall became known, leaving the group with a 30 percent stake in that division.
Its rescue by bondholders became one of Britain's biggest financial scandals of the past year, subject to a number of inquiries and with questions raised about how Flowers, with no banking qualifications, was appointed chairman.
(Reporting by Belinda Goldsmith and Matthew Scuffham; Editing by Stephen Addison)
